The 2021 Budget signals a move away from small government to recovery through spending and jobs. There is a welcome and significant focus on funding for the aged care sector, as well as encouraging young people and women back into workforce.
There are no major surprises or radical changes to taxation. Instead, the budget aims to promote stability and confidence in the economy by investing in jobs.
The female focus addresses the political climate of 2021. The 2021 Budget seems to pivot away from last year’s emphasis on a recovery led by high-viz infrastructure and construction industries. Instead, it focuses on the ‘care economy’ and industries where women do the heavy lifting: the sectors caring for children and senior citizens, and educating students.
A welcome evolution is the explicit acknowledgment of and funding for services that keep women and children safe. Moores will watch with interest whether this evolution will be enough to secure the structural changes that have been demanded.
Despite being rebranded a ‘care’ budget, critics have identified that the 2021 Budget largely overlooks charities, welfare (including no raise to the Disability Support Pension) and housing and homelessness – sectors that are critical to direct relief. Disappointingly, the Budget also overlooks First Nations equality, with no mention of a voice in Parliament or action to reduce deaths in custody, and fails to invest in climate action and overseas aid.
This article focuses on the 2021 Budget’s impact on for-purpose organisations, particularly those in social and community sectors. Shortcut to the following: Education | Childcare & Early Education | Women | Mental health | Aged Care | Jobs and Employment | Small and Medium Businesses | Not-for-profit sector | Housing
The budget has been criticised for its band aid response to plug gaping holes in the education sector which experienced prolonged strain during the pandemic.
Commonwealth funding of schools is substantial, but in real terms this budget simply meets the needs of the sector and the largest growing segment of lower fee and higher funded schools.
The continued border closure to international students until at least the end of 2021 has bitterly disappointed educational institutions wanting to welcome international students back to Australia, especially given that many have sought to engage with government about possible protected pathways. The 2021 Budget assumes Australia will commence phasing in international students from late 2021.
Others in the education sector are facing the ongoing wellbeing crisis among their international students who cannot get home. Likewise, there is a lack of respite for homestay and other providers. Regulators have just this week grimly acknowledged that interim regulations designed to provide flexibility around homestay standards for the December/January holidays will now apply for the rest of this year.
Accountability – not service provision – is the theme of school funding, as the 2021 Budget focuses on data collection to ensure standards are met in the sector. In education, the 2021 Budget specifically provides for:
- $20 million to continue the Nationally Consistent Collection of Data on School Students with Disability to support the capacity of Australian schools to deliver better education outcomes for students with disability;
- $5.8 million to collect Australian Teacher Workforce Data to identify long term trends and emerging issue affecting the teacher workforce;
- $4 million to deliver the Literacy and Numeracy Test for Initial Teacher Education;
- $16.6 million to assist boarding providers to respond to COVID issues and support Aboriginal and Torres Strait Islander boarding students;
- $8.1 million over four years to increase the scope of the Together for Humanity program promoting diversity and belonging; and
- $3 million to support 4,500 young people with additional assistance to participate in the Duke of Edinburgh.
For higher education, the Government will provide an additional 5,000 commonwealth supported short course places at non-university education providers in 2021. There is also a focus on PhD research, promoting innovation and closer integration with industry. This high level focus does not support the everyday Australian seeking to attend university.
Preschool services will be supported with $1.6 billion over the next four years. Conditions to receive this funding are yet to be set, but will include attendance targets from 2024.
In disappointing news to the early learning sector, the support for ‘universal access to 15 hours of preschool’ is limited to the year before prep (that is, four year old kindergarten). Limiting funding to four year old kinder falls significantly short of recommendations by reform advocates who sought increased funding of 3 and 4 year old kinder. Without funding for three year old kinder, many low income families will find the cost of child care and early learning education prohibitive.
The 2021 Budget does provide extra $1.7 billion over five years to make childcare more affordable. This package means families with a second or subsequent child will be able to receive the Child Care Subsidy for up to 95% of costs. This will provide some relief for families with multiple young children and ease costs of living for low and middle income families. While the increase in the Child Care Subsidy will benefit approximately 250,000 families by an average of $2,200 per annum, the changes do not come into effect until July 2022.
The 2021-22 Women’s Budget Statement provides a suite of packages totalling $3.4 billion dedicated to child care, domestic violence prevention and support, and return to work initiatives. This is a contrast to the 2020 Budget which had little reference to the Women’s Economic Security Statement.
Around half of the women’s budget is directed to the childcare package ($1.7 billion) to reduce barriers to women participating in the workforce. The measure has been positioned as one which will increase workforce participation of women and have a positive flow on effect for the whole economy. Women’s jobs were disproportionately impacted by the pandemic and many also bore the brunt of caring responsibilities during lockdowns and remote learning. Women’s workforce participation remains around 10 percentage points lower than men’s (61.8% of women are in the workforce). This echoes an overall theme of the budget: growth and recovery through jobs.
While this initiative is welcomed and reflects the reality that many women are the primary carers who take more time off work to care for young children, it has been criticised for presenting caring responsibilities as a “women’s issue”. Moores hopes to see other policies and strategies to promote gender equality between working parents, particularly those which incentivise both parents to share caring for children while working.
The Women’s Budget Statement also includes a $50 million Women@Work Plan to further address barriers to participation in the workforce, and provides for the creation of a Respect@Work Council to address workplace sexual harassment. Over 4 years, funding in response to the Respect@Work report will support the Attorney-General’s Department, Workplace Gender Equality Agency, and the Australian Public Service Commission to strengthen reporting on sexual harassment prevalence, prevention and responses. A criticism of this measure is the lack of funds for direct response and grass roots organisations.
Another support for women in the workforce is $35.9 million for women entrepreneurs to access mentoring.
Significantly, there is $1.1 billion earmarked for women’s safety, domestic violence prevention and support of domestic violence victims. This includes domestic and sexual violence prevention programs for the states, grants for women fleeing violence, consent education (do we all remember the milkshake ad?) and women’s legal services. Moores waits with interest for detail of these worthy programs and any other initiatives which are aimed at dealing with the causes of domestic and sexual violence.
Changes to superannuation will also benefit working women and part time and casual employees. Previously, eligible employees needed to earn at least $450 (gross) per month before their employer was required to make superannuation guarantee contributions on their behalf. From 1 July 2022, the $450 threshold will be scrapped. Treasurer Josh Frydenberg said the change will boost the super of about 200,000 female workers.
In contrast to the 2020 Budget (delivered a mere 7 months ago), there is a significant and welcome female focus after one of the toughest times for women in recent years.
The Federal Government will spend an extra $2.3 billion on mental health services over four years via the National Mental Health and Suicide Prevention Plan. Spending is focused on funding diagnosis and treatment centres and suicide prevention.
Of that, over half ($1.4 billion) will be allocated to Commonwealth-funded mental health centres which specialise in diagnosis and treatment of conditions. This includes Headspace facilities across the country.
The remaining funds are allocated as below:
- about $298 million to support suicide prevention;
- about $107 million to support mental health prevention among vulnerable Australians, particularly Indigenous Australians;
- $249 million to help create digital mental health services for online counselling and support; and
- $107 million to train nurses and psychologists in mental health.
These funding announcements are a response to the Productivity Commission’s Inquiry into Mental Health. Mental health services had also previously warned they were facing a funding crisis, from increased demand due to the pandemic and recent natural disasters.
The practical measure of creating Medicare items for mental health access to GPs, psychologists and psychiatrists is welcome.
In response to the Royal Commission in Aged Care Quality and Safety revealing the extent of the industry’s shortcomings, the 2021 Budget promises the industry $17.7 billion in funding, and $119 billion over the next four years. Aged care funding is focused on:
- more home-based care with 80,000 additional home care packages available, costing $6.5 billion;
- improving residential aged care quality and safety standards. For example, $3.9 billion has been dedicated to implementing a minimum amount of front-line care minutes (200 per day) in registered care homes from 1 October 2023;
- improving aged care services quality and sustainability with innovation in aged care infrastructure;
- targeting skills and staffing shortages by recruiting and training aged care workers with an investment of $9.8 million in recruitment for the aged care workforce; and
- increasing governance requirements, including the establishment of a National Aged Care Advisory Council.
Aged care spending will have significant flow on effects for the care economy, and the Australian economy more broadly. Helping employees in the aged care sector helps women: 90% of the aged care workforce is female. There will be additional training places through JobTrainer and training opportunities for registered nurses to move into aged care work. Job growth in this sector will also help meet the Government’s target of record low unemployment (4.5%) by the end of 2022.
Given the industry’s flaws identified by the Royal Commission and its pandemic response, the detail of the funding will be keenly read, particularly any detail on ensuring that funding flows through to quality outcomes and that serial offenders are held accountable.
As mentioned above, from 1 July 2022, employers will be required to make superannuation guarantee contributions to all eligible employees, including those earning less than $450 per month. Superannuation guarantee contributions in 1 July 2022 will be 10.5% (see related article “Superannuation to increase, but mind the catch”). Businesses will need to factor in this increase to the cost of employment.
The Government has also committed $500 million (to be matched by state and territory governments totalling $1 billion) to expand JobTrainer to train and reskill 17-24 year olds. The Government predicts 163,000 places will support young people until 31 December 2022.
Continuing support for young people in the workforce, the 2021 Budget provides an additional $2.7 billion for 170,000 new apprenticeships and traineeships. Employers will receive a 50 per cent wage subsidy over an apprentices’ first 12 months of employment. Apprentices must be signed up by 31 March 2022 to be eligible. This subsidy, and other tax reductions for small and medium businesses, are aimed to offset increases in employment costs from superannuation.
As part of the 2021-22 Budget Deregulation Measures, there will be $10 million invested over four years in regulatory technology to assist employers interpret and comply with modern awards. This will fund development of application programming interfaces (APIs) from the Fair Work Commission’s Modern Awards Pay database, with the intention to support employers obtain real time data on award pay and conditions, hereby improving compliance.
Small and medium businesses
Tax cuts for small and medium businesses are also positioned to boost employment. Companies with a turnover of less than $50 million will see new tax rate of 25% from 1 July 2021. The 2021 Budget also seeks to reduce the costs for businesses to take on new employees with wage subsidies, discussed above.
A significant measure aimed at small and medium businesses is the instant asset write off of capital expenditure. This is no longer limited to small businesses and there is no cap on tax reductions. The upfront tax deductions for capital expenditure in plant or equipment has been extended from 30 June 2022 to 2023, recognising the delayed abilities of companies to invest while bouncing back from 2020.
The 2021 Budget also supports small businesses to adopt digital technologies – with a $12.7 million expansion of the Digital Solutions – Australian Small Business Advisory Services.
The attitude of the small business concessions is that the Government wants to create breathing space so SMEs can get back on their feet.
Some critics have said the 2021 Budget is blind to the not-for-profit sector.
Many charities stand to indirectly benefit from the increase in funding for the care economy: aged care, mental health, childcare, and women’s emergency services. However, the not-for-profit sector featured as little more than a footnote in the 2021 Budget, despite employing more than 1 in 10 employees in Australia. Many of the employment incentives or tax concessions for businesses will not help charities.
Despite calls from industry that charities are critical to the care economy, the budget provides no direct support to the sector. Instead, it increases regulatory burdens on charities. From 1 July 2023, non-charitable not-for-profits will be required to provide information to the ATO to justify their eligibility for tax concession status. Affected organisations include community services, sporting associations or recreational and agricultural organisations. The ATO has been designated $1.9 million to build an online system to enhance income tax exemption transparency.
It is hoped that job creation and indirect funding will flow through to those organisation which continue to help the most vulnerable in Australian society.
Concerningly, the 2021 Budget does little, if anything, to address the significant and growing demand for social and affordable housing, and is focused entirely on measures for those with access to equity (including first home buyers).
The lowering of deposit requirements under the First Home Super Saver Scheme will help single parents and first home buyers enter the housing market. The 5 per cent deposit scheme will help an additional 10,000 first home buyers annually purchase a new dwelling. While the budget helps more Australians into home ownership, there is little concerning the social infrastructure of social and affordable housing for those in the community who cannot make it onto the property ladder and are at risk of being left behind.
Likewise, the HomeBuilder scheme provides grants of up to $25,000 for new builds or extensions, but support of large scale affordable housing projects was lacking. HomeBuilder seems geared to help the average homeowner get an extension, and employ those in the construction industry, as opposed to directly addressing the lack of affordable housing for renters. In this sector, Government appears to be relying on indirect measures such as HomeBuilder (hoping that funding extensions will allow people to stay and not move) and slowing population growth (hoping that this reduces housing demand) is being relied upon to reduce housing costs, instead of direct measures.
Mission Australia reports there are 200,000 people on social housing wait lists, and at least 116,000 people who are homeless. Despite the female focus of the budget, homelessness – which disproportionately affects women facing domestic violence – was not addressed.
Salaries for those working for homelessness services will be protected. The federal government is continuing $56.7 million in funding for homelessness services via the Equal Remuneration Order (ERO) supplementation. This funding secures 500 jobs in the sector, again supporting jobs in a female-dominated workforce (as with aged care and child care).
How we can help
Moores is pleased to see so many worthy sectors, and women, being provided for in this budget. We continue to watch with interest to see measures being implemented to bring about much needed improvement to our stability, mental health and economic participation.
The team at Moores have strong expertise and experience in key sectors including education, child safety, social housing, not-for-profit and workplace relations. We use our deep knowledge and practical experience to create a positive impact in our client’s lives and organisations. For more information, please do not hesitate to contact us.